US LLC from Japan: In Principle, Japan Sees a Corporation

0:00Can a Japanese resident own a US LLC?

In America, a one-person LLC is usually see-through for tax. In Japan, the tax office looks at the same company and, in principle, sees a corporation. Haruto, in Osaka, has an American buyer who wants to sign with a US company. Can he have one from Japan? On the American side, yes. No social security number, and no trip to the US. We're BaseAcross. We set up US companies for founders outside America, so we'll be straight with you.

The US part is simple. The Japanese part needs care. Let's print it, one block at a time.

0:40Do you need a US company in Japan?

Before any of that, ask whether you need one. The big card processor already serves businesses in Japan, so getting paid isn't the reason. And because Japan treats an LLC as a company, and can catch one that pays little tax, it needs a reason. Good ones are a US buyer who wants a US party to contract with, US investors, or a marketplace that asks for one. Haruto has the buyer, so he has his reason.

1:10How does the National Tax Agency treat a US LLC?

Now the view from the tax office. Japan's National Tax Agency treats a US LLC, in principle, as a foreign corporation. That holds whether America taxes it as a company or looks straight through it. So in Japan, the LLC's profit isn't Haruto's own income as it's earned. What makes a company Japanese is its head office. Where it's managed doesn't decide that. But a US company with a fixed place of business in Japan can still have a permanent establishment here.

How yours is treated is for your zeirishi, your tax adviser in Japan.

1:48Wyoming LLC or Delaware C-Corp, and the EIN

Setting it up is quicker than the thinking. A Wyoming LLC suits a business you run yourself, selling to US customers. A Delaware C-Corp suits raising from US investors. In Japan, both count as corporations. The company needs a registered agent, an address in that state for legal papers, not where you work. Then the EIN, its US tax number. Without a social security number, it's a paper form to the IRS.

You'll pay in US dollars, so check your card's exchange rate and fees.

2:24Can you bank from Japan?

Banking takes the lightest ink. One of the US fintech banks takes applications from founders living in Japan, and a multi-currency account can give the company US account details. Each provider reviews you, decides for itself, and can decline. Use the same names, addresses and business description everywhere.

2:47Can the CFC rules add the LLC's income to yours?

Here's the rule to read twice: Japan's rules on controlled foreign companies. If Japanese residents control a foreign company, and you hold a set share or more, its income can be added to yours. That's when its tax burden is under a set line and it fails the activity tests. A single-owner LLC that pays no US tax is under that line. Here's the guide's own illustration. Say Haruto's LLC earns a hundred thousand dollars from US clients, and the IRS looks through it, so it pays no US tax.

In Japan, that's a company he controls, paying nothing. If it fails the activity tests, its income is added to his for the year, paid out or not. That's an illustration, not advice. The tests are for his zeirishi.

3:39Foreign asset report, residence and the treaty

Two more Japanese duties, then the American one. If your foreign assets pass a set value at the end of the year, you file a foreign asset report by the middle of the next. Shares in your US company count. Japan has two kinds of tax resident. A permanent one is taxed on income from anywhere. A non-permanent one is taxed on foreign income only when it's paid in Japan or sent there, and skips that report.

Ask your zeirishi which you are. There's a tax treaty between Japan and the US, in force. It caps US withholding on most interest and dividends, and exempts royalties. Work you do in Japan generally isn't US income, so for services it matters less. The company still files a report with the IRS every year, even without sales, and missing it is expensive. It's usually due in the spring, and there's a form to ask for more time, filed before the deadline.

4:40In what order?

Now the order, block by block. Check the Japanese side with your zeirishi first: whether you need a US company at all, and whether the controlled-company rules would reach it. Then form, then bank. Put the IRS report, your Japanese return and the asset report on one calendar. The full guide, with every source and a checklist for your zeirishi in English and Japanese, is linked below.

And Haruto? He got both views of his company to line up, with his zeirishi, before he ordered a thing.